Mistry accuses Tata Global of making false claim to bourses

Independent directors Darius Pandole and Analjit Singh too had opposed the bid to replace Mistry and said the process was illegal.By Zeeba Zachariah

Mumbai: Cyrus Mistry, who was ousted as chairman of Tata Global Beverages on Tuesday, has written to its company secretary V Madan asking how a false declaration about him being replaced by a majority decision of the board of directors was sent to the stock exchanges. Soon after the Tata Global board meeting ended, Madan had informed the exchanges that the board had "resolved" to replace Mistry with Harish Bhat. Within hours, Mistry wrote a letter to Madan asking how such a statement was sent to the bourses without any reference to the board, said a person familiar with the matter.

An email query to Tata Global regarding Mistry's letter to Madan did not elicit any response till the time of going to press. On Tuesday, Mistry, in a public statement, said the company's communication to the stock exchanges about his removal was "inaccurate and illegal".

Sandeep Parekh, founder, Finsec Law Advisors, said going by both Tata Global and Mistry's statements, questions had arisen over whether the item (removal of Mistry from Tata Global's chairmanship) was 'legally' placed before the board.

Under rules governing board meetings, any item which is urgent and cannot be intimated in a notice in advance, can be taken up for consideration only with the permission of the chairman and the consent of a majority of the directors present in the meeting. Since the removal of Mistry as chairman from Tata Global's parent Tata Sons, the Tata Global Beverages board had met once, on October 26, before Tuesday's meeting. The first meeting was chaired by Mistry and there was no discussion about his removal from chairmanship of Tata Sons, which is the holding company for Tata Global.

Mistry's statement on Tuesday said the item (replacing him as chairman of Tata Global) was not on the agenda and that it was a repeat of the illegality that the board of directors of Tata Sons carried out on October 24. Independent directors Darius Pandole and Analjit Singh too had opposed the bid to replace Mistry and said the process was illegal.Bhat, however, dismissed allegations of illegality. "There are legal provisions under the Companies Act for bringing in a proposal which is not on the agenda and those legal processes were followed to the tee," Bhat told ET Now.

Bhat said he had proposed the resolution to remove Mistry as chairman as there's significant risk from having a chairman who is in a position of "hostility" to Tata Sons. He had also proposed S Santhanakrishnan, a non-independent director of the company, to chair the meeting as soon as the accounts were approved and before the fifth item on the agenda could be initiated. Mistry said the proposal to remove him was not on the agenda, after which he in his capacity as chairman called the meeting to a close.

Bhat told ET Now that one of the directors proposed his name as chairman. Bhat is a rare Tata Group veteran who is not on the board of Tata Sons but has become chairman of one of the major companies. Traditionally, persons on the boards of both Tata Sons and a large operating company are appointed as chairman or vice-chairman in the operating company.